1. Amazon is --- probably, and for the next 18 months or so --- going to have the most popular Android tablet on the market.
2. Amazon does not provide mainstream users with access to Google's Android Market.
3. Android developers are going to be compelled to deliver software to Amazon users, because Amazon is going to supply a plurality of the entire addressable market for Android apps.
4. To supply Amazon users with Android apps, developers have to use the Amazon market.
5. Not only will developers need to use the Amazon market to address Amazon customers, but off-brand Android users can (and may) also end up relying on Amazon's market.
Google's Android Market is structurally disadvantaged. And, simply having to sell through Amazon is already a hardship for developers; Amazon has policies that developers are going to have to comply with, even though those policies aren't inherent to the Android ecosystem.
Saying that Google doesn't have to care about native apps, that the web is where it's at, that they're "skating to where the puck is going to be" --- that's all besides the point. The concern is specifically about the Android app ecosystem. If you don't think it matters that Amazon is redefining that ecosystem, well, OK, but that doesn't make it not a concern.
> 1. Amazon is --- probably, and for the next 18 months or so --- going to have the most popular Android tablet on the market.
In the US market. Until and unless Amazon changes it the Kindle Fire (like the Nooks) are irrelevant internationally. In addition, making the Kindle Fire international is easier said than done. With a few exceptions, Amazon needs to secure rights to sell movies and music overseas (books are taken care of, for the most part). A further complication is that Amazon's Cloud Player currently relies on recent court decisions codifying fair use rights (with respect to media storage and streaming) that may not exist in other countries.
> 3. Android developers are going to be compelled to deliver software to Amazon users, because Amazon is going to supply a plurality of the entire addressable market for Android apps.
The only plurality Amazon has a chance of capturing in the foreseeable future is "Android tablets in the US". An interesting slice, to be sure, but one of many.
> 4. To supply Amazon users with Android apps, developers have to use the Amazon market.
False. The Kindle Fire permits side-loading (and it is no harder than side-loading Amazon's Appstore onto a typical Android phone). Alternative app stores (e.g. GetJar) are going to promote themselves and give even Kindle Fire users incentives to install them (e.g. GetJar's time-limited exclusive. Beyond that, prominent open-source software available for Android (e.g. Firefox, Connectbot) isn't in Amazon's Appstore, giving users another incentive to sideload.
> 5. Not only will developers need to use the Amazon market to address Amazon customers, but off-brand Android users can (and may) also end up relying on Amazon's market.
Off-brand users are most likely getting an app store by side-loading anyway, so I don't see how they're going to end up relying on one store to the exclusion of others. It seems more likely that each store will have its pluses and minuses and off-brand users will choose between them on that basis.
Everything you've outlined are concerns for developers, not for Google or Amazon. And as painful as it may be for small, independent developers...we're not what really matters in these ecosystems. Regardless of who owns the app store, we're going to stay irrelevant.
The real dollars are in commerce, search, and the gateway to these is going to be mobile. That's the real implication -- not a few hundred thousand developers getting yanked around and having to go through 4 app store approvals processes instead of 2.
It is a good thing for Google that Amazon sells more Android powered devices. It helps them that more people are online. Regardless of how many apps are sold or how easy or tough it is to install etc - the fact remains that the web is way more interesting and easy to navigate than an app.
As long as they can get you to the web...through any mechanism possible - they win.
Amazon would have to be blind to their own success selling one type of virtual good to kindle owners for them to not care about selling another type of virtual good to kindle owners.
As others have pointed out, the fact that they went through the trouble of building their own App Store proves they care deeply about app sales.
What's more, the low margins on the kindle fire prove they not only care about app sales (and book sales, and movie sales, and music sales), they're relying on them.
Amazon is going to recoup their costs through additional commerce on Amazon.com. That's what people use tablets for and it's a massive market that Amazon actually has leverage in. It's a very calculated move to build a tablet first and not a phone. The real target is driving more sales on Amazon.com
I think it's important to keep this in mind. As successful as Apple's app store has been, 1 billion in profit is still relatively small potatoes. Android's significant outpacing of Apple in sales despite a much weaker app market underlines this.
They are betting their entire tablet strategy on by losing money on each hardware sale.
Can someone tell me why this isn't considered dumping [1]?
Google is a search company. Owning the platform is Google’s way of making sure they own search. Google does not care about facilitating app sales because they can make 15-30x the money from search.
Google benefits from owning the platform because the Google suite of software (AppStore, Browser, Mail, Maps), bundled on almost every Android device, drives search traffic to Google and encourages users to stay within the Google ecosystem.
Most Android OEM's are effectively forced to carry this software (and meet 'compatibility requirements' such as Google being the default search engine) because without it their devices are far less compelling. Replacing an email client is a solvable problem, a maps alternative is something that could be licensed, but creating an entire AppStore replacements is unrealistic for most companies.
Unless you are Amazon.
If the Amazon AppStore becomes a major player in the Android app market, and OEM's choose to license it, thus forgoing the Google software suite (most of which is much easier to replace), Google will be in serious risk of losing their leverage over OEM's. They will not be able to ensure Android devices drive users to their services, and could even end up paying OEM's (a'la Mozilla) to have Google as the default search option on these devices.
Fragmentation makes developers' lives more difficult, makes users' lives more makes difficult, but drives people to the web as a unifying platform. Google's cost of customer acquisition may go up in the short term, but Google still makes all of the money from search at the end of the day.
[1]: http://9to5mac.com/2011/09/21/google-23rds-of-our-mobile-sea...
Of course, Nav is more relevant to phones than tablets, but I wouldn't even consider any Android phone that didn't have Google Nav.
It's interesting that an ex Googler who implies this is based on inside knowledge would say this.
It illustrates how different their priorities from Apple, who care about 3rd Party developers because they provide key differentiation that adds value to the hardware.
Google's approach leaves differentiation to the individual manufacturers, so the manufacturers have an incentive to want distinctive software on their hardware. That's why we see the motoblur, sense, etc.
I suspect Samsung would love to operate their own App store, but of course they can't because they'd lose Google's support.
Samsung runs their own Appstore. So do most carriers (and NVidia has one especially for Tegra devices).
Google doesn't care, and most developers ignore them because the Google Market is where the action is.
(In Amazon's case it is different because the Google Market isn't installed)
Then I'd guess Samsung would probably be interested in not shipping the Google Market.
I wonder what would happen if Samsung paid for an exclusive on a big name title - e.g. a future Angry Birds
Amazon goes as far as using writers to rewrite the descriptions of all apps before they are put up in their store. That is not the behavior of a company that doesn't care about app distribution.
Firstly the author is taking things too far by comparing the number of Android phones with tablets. Amazon doesn't have an Android phone. But they will most likely have the best selling Android tablet. And the argument is they may own the Android tablet market which gives them tremendous leverage.
"Google does not care about facilitating app sales because they can make 15-30x the money from search."
Here's he's taking the overall figure for all of Google's search revenue and just applying it to Android. That's not a fair comparison to app revenue. And assuming that Search Revenue > App Revenue, therefore Google does not care.
"Google clearly believes that the web will win out in the long term and native apps are a stop-gap, "
... Yeah, that's a big assumption based on a world before native apps.
"Amazon does not care about app sales... Kindle Fire is about selling more digital content and facilitating e-commerce"
Except apps are digital content and are a huge growth market.
Android 4.0 and beyond is designed to run on both tablets and phones. From Google’s perspective they are gateways to search so it’s completely reasonable to compare them to each other. From Amazon’s perspective the user behavior around commerce is very different, which is why they’re going after tablets first. There are rumors they will build a phone later as well.
I’m not applying the overall search numbers to Android. I’m saying that the amount of money they make off of Android pales in comparison to what they make off search today and what they will make off of mobile search in the future. App sales are going to be tiny compared to mobile search revenue (especially if Google believes that the web will win out in the long run).
Yes, Amazon would love to sell more digital content — apps included. The gross margins would be awesome for a retailer, so it’s clearly enticing for them. But most of the transaction volume flowing through tablets is not going to be in apps. It’s going to be in traditional e-commerce. As I said in the post, the apps will be an awesome secondary revenue source for them. But what they really want are all of the e-commerce transactions for electronics, movies, ebooks, clothing, jewelry, and everything else that Amazon sells.
Put it this way -- getting you to buy 1 item of jewelry through Amazon.com will be more profit than they'll get from all of the apps you buy over the life of the Fire.
Apple does it so they can sell more iDevices, Google does it so more people want to buy Android devices and see their ads, Amazon does it because they want people to have Kindles to buy their other digital goods.
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Not that this is likely, but I don't think Google would be happy if Amazon took over app distribution. They wouldn't want another company in the middle that could dictate terms to Google. Remember how for a while it looked like Apple was going to banish Google ads from iOS apps.
Google doesn't care about owning app distribution because they don't make money out of devices so differentiation is a problem they leave to the manufacturers. They just want to make sure Apple doesn't end up owning enough of the mobile space to threaten Google's ad business.
Amazon cares about owning app distribution because retail distribution is what Amazon does. As the retail of digital goods displaces the retain of physical goods, Amazon seeks to establish its position in the delivery chain, or risk losing out.
Primarily because as long as the underlying platform doesn't branch too far away, every dev who makes something for the Amazon app store is almost certainly going to also make it for the Android Market. That means a huge boost to the interest in making tablet friendly apps for Android and a huge boost to the potential return from making an Android port (or an Android exclusive app) for a developer.
But also it is great for Google because it validates all their arguments about Android being an "open" operating system and will keep allegations of things like anti-trust and other potential criticisms of Google's role significantly muted.
